and "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe concern nin and steve lease man. he is in for andrew ross sorkin. mary is going to be joining us from the deadly derailment in the bronx. before we get to all of that, let's talk about the markets. the dow has been negative only five months out of the last 26 months beginning with october of 2011. that means that the index has been positive more than 80% of the time. here's a look at the major market returns just this year. the dow was up nearly 23%. the s&p up 27%. the nasdaq up more than 34%. if you're following money flows, investors poured $31.6 billion into all equity mutual funds.

equities were favored over bonds but the flows into equities moderated into october. as for december, it historically has been the best month on the average for the dow and the second best month for the s&p. this morning the futures, when we get into the trading month for december, you can see they have barely budged. dow futures by 4 points, s&p down by 1 and nasdaq up by 1.5. among the eye lights, we have the european central bank's last meeting of the year. in the u.s., a first revision to the third quarter gdp comes on thursday. friday, the big number. the november jobs report. markets watching that very closely to try to figure out what the fed is thinking about all of this. steve, i'll send it over to you. >> thanks, becky. let's talk shopping. after the first official weekend of holiday retail. the national retail federation reports shoppers spent less than they did a year earlier. the nrf suggests shoppers spent

$407.20. online sales soared. meantime, research firms say the traffic at brick and mortar stores increased. sales rose by 2.4% thursday and friday. we'll talk to famed retail analyst dana telsey in a few minutes. >> are you okay? >> me? >> are you a little scratchy? >> no, i'm good. >> you are? >> yeah. >> you have no issues? >> i'm just fighting something that my kids had, that's all. >> you are? >> yeah, i'm good. >> oh, no. >> i feel good. i feel good. >> you won't come over here -- >> i can stay over here if you want, joe. that's okay. the whole show. >> you know, he sat in your seat on friday so that means -- >> that was before my kids had it. >> the germs are already there. >> isn't there like a seven-day incubation period? >> you were making me think that i was not hearing it in your voice. there is something going on, i

can hear it. >> all right. all right. you can come over here, relax. >> this is not that dustin hoffman who have movie. >> okay. let's check on markets this morning because december is a big month. what are we up now? are we up 25? 10 is possible to do in a month. >> you think this is 35? >> i don't know. i never thought it would happen again. i said how much -- how great it was when it happened three straight years in the '90s. that was a stock market. that gets people excited. that makes people money. i'm not saying that's going to happen, but december historically is one of the strongest months. it's not completely unfathomable to think that the s&p could be up maybe 30. i mean, 30 is possible, isn't it? >> i made it -- >> that was a while ago. >> -- for 2012 but we were up in 2012. i can't get it exactly right, but the market has been up i

think 40% since then. just getting the direction right is a good thing. no one knew what was going to happen. anyway, so, let's -- >> we talked possible. >> drones. we're going to talk drones. we will. we will. we will. >> called a tease. >> there's a million things to think about with the drones. my mind -- >> you've been racing with this. >> because it's like the jetsons. have you seen the future of this? >> yeah. >> and they're designing flying cars now supposedly. you saw that last week. there will be a lot of things up there supposedly. we're not -- gravity will still be around, right? >> right. >> not the movie. >> amazon can repeal that? don't they have enough money for that? >> you know the website designer they're using for the navigation on this. the canadian firm that did obama care. that's the one that they're using for -- you know, i hear my mother saying, you could put an

eye out with that. you could put an eye out with one of these things, couldn't you? >> the place where you -- it would be way far away from everything. the place they're using it are where you're getting most orders, manhattan. that's insane. >> i've said that let's say we get the biggest business guest in the world, who is it? is it warren buffet, is it bill gates? >> right. right. >> our biggest business guest is not charlie sheen, is not as good as a d level lindsay lohan. >> right. >> so when d-- >> in terms of eye balls? >> yes. so when "60 minutes" decides to go slumming into our realm where they're doing business people. they get meredith whitney, she says the world is going to end. they need something big. jeff, we're thinking about putting you on. what have you got? >> give us something. >> yeah. >> i think laura logan said, hey, buddy, you were there.

what's the biggest thing you've got? maybe that didn't happen n. this case i think they ask him, bezos, what have you got that's going to make you worthy -- >> they just kind of cooked this up, you think? >> i think he thought, you know, "60 minutes," they think they're so smart, let's see if they'll actually run this story. let's see if they'll believe that i'm going to send packages through drone delivery. >> you just are a scrooge on this bun. i mean, i think -- i think -- i'm all over this. >> did you see what the faa said? >> in 2017. >> are you kidding me? >> they said 2026 before they're going to get the majority of the route. >> i'm going to be the -- >> people will demand it. >> the singularity could happen before this. i might be cybor. >> i think what's more interesting is you sitting on your property with a shotgun and shooting down a drone when it comes over your property. that's interesting to me. >> the first organ i'm going to have replaced by a machine, too, are my eyes. >> your snoois. >> my eyes to be able to see.

you were worried, weren't you? i know you were. anyway, in global -- my eyes. why, what did you think? >> joe, i had no thought at all. >> okay. >> i had no thought. it didn't even occur to me what organ you were talking about. in global news it expanded in november. major asian markets closed as you can see, a nice one in hang seng. let's get now to europe. what would they think of this? >> the drones? >> yeah standing by in london. as they leave the distribution center, ross, carrying something, are they -- they're not like 30 feet off the ground. do they start out high and then come down? >> given air space that they'll be able to travel in and they'll travel at that level. >> that's crazy. >> i was at a fancy party and

i'm not going to mention who in the hamptons -- >> last summer? >> recently. >> there was a drone taking pictures of people. >> you had one of these things. >> bumping into the house. >> ross, did this make its way across the -- do you think he's junk yanking our chain? do you believe in drones by 2015? >> number of issues. i'm not sure it works in a built-up area. i don't know how a drone is going to deliver anything in london, for example. there isn't the space. you can't just land a drone for an apartment. i don't think that's going to work. i've talked to firms that are using drones for delivery for aid and in remote parts of the world. in most markets where you have very poor road access, drones there work brilliantly because it's literally up and over and down the other side of the mountain. >> couldn't a drone get you a beer at the pub? that would be something that would capture the imagination there, right?

>> that's an australian barman. >> exactly. >> we don't need -- there's nothing wrong with a nice australian pulling a pint down at my local. that's perfectly fine. don't need the robot to do that. there's an art as well. you have to get the head right, steve, on pints, all right? and i don't know if a machine could do that better than man. drones aside, today we are down. decliners outpacing advancers by roundabout 7.38 and we're on the session lows as well. joe was talking about the data we had out of china. plenty of data out of the european area as well with pmi. footsie was down. up 43 points. xetra dax is fairly flat. we're up. all-time highs, 9,300. the ftse down 1 1/3%. talk about the china pmi data. that did have an impact in terms

of booting commodity accounts. the kiwi and the aussie. >> take a look at the sector breakdown. retail resources, one of the best performing sectors though it is still fairly flat. travel/learn sure up .4%. food and beverages are up. pmis in the eurozone that ticked higher but they were still weak in france. in fact, that economy is contracting and better pmis out of the u.k. the u.k. economy firing on all front at the moment. back to you. >> ross, thank you very much. again, ross westgate, we'll check in with you tomorrow. retail, another holiday kickoff, it's come and gone. how did the retailers do. joining us is dana telsey. the reports that i've seen suggest this wasn't really a build. sales were actually down over the weekend. it makes you wonder if opening earlier on thursday is worth it for all of the big retail

companies? >> it definitely seemed as if sales on thursday pulled from friday. even a little bit from over the weeken weekend. overall when speaking to retailers, low single digits is where the game was. >> so what does this mean? was this a mistake for them to open early like this? was this simply an issue that the retailers started talking about the holiday sales as early as november 1st i think in walmart's case? what happened here? >> i think that you basically had the promotions and all the advertising for it starting way before this thursday or friday of thanksgiving and black friday. you had many deals begin on monday and tuesday, and the consumer got washed out as they went through the weekend. i think you still have 40% of holiday season sales that typically occurs december 15th through the 25th. i think when all is said and done, we'll get some reports on thursday from the retailers themselves. it will show a low single digit increase at best. i think we will have more

retailers opening on thanksgiving day more this year than last year. >> if it didn't work this year y would they do it next year? >> because you had big traffic 8:00 p.m. until 2:00 until morning. that was midnight to 6 a.m. you had probably better sales growth, 8:00 p.m. on thanksgiving day than you did midnight to 6:00 a.m. >> if that's the case, do you buy these stocks. >> i think overall first quarter and end of the fourth quarter, best performing times for the retailers. the names that did well, best buy, deckers, it was gap, it was macy's, it was kohl's who we thought had good weekends. i'd say you buy the stocks going into this holiday weekend. you do get a lull in the next two weeks and then they come back. you want to watch the names right now. >> dana, did you see this national retail federation report that everybody is talking about which kind of put the gloom on the holiday shopping

weekend? >> yes, i saw the lower average amount spent and this was a survey of 4,000 people. i think when you look at their numbers compared to others' numbers, it seems like directionally certainly maybe a little bit slower than last year, but a decline seems harsh. >> let me give you one piece of data from here, which is that nonholiday shopping actually fell. the percent of people who said they shopped for nonholiday stuff fell 3 points and the percent who shopped for holiday rose 3 points. so we can't really say that holiday shopping is down to the extent that people are just not shopping for nonholiday stuff. a lower percent of people are shopping for nonholiday stuff. what accounts for that, do you think? >> i think overall you still have self-gifting that's very important. i think black friday, a lot of it is buy for yourself and then look for the gifts for others. you have the cyber monday coming

up also. i think spending on the home is what consumers are spending on themselves? self-gifting. >> i like that term. >> i think it is. >> we'll learn more about that. >> dana, thank you. great talking to you. now back to the horrible story we mentioned at the top of the hour. four people killed and more than 60 injured after a crash in the bronx. mary thompson joins us. mary? >> reporter: thanks, steve. over my right shoulder you can see the scene of sunday's fatal accident which you said killed four and injured at least 63 ores. now from our vantage point we can see the accident scene which is very well lit. there are emergency workers down there. investigators have been there since noon wednesday. the national transportation safety board is heading up the investigation into the accident and it expects that investigation will take anywhere from 7 to 10 days. here's ntsb board member earle wenner. >> throughout the next few days our investigators will work on scene to thoroughly document the

accident scene gathering the factual information. our mission is to understand not just what happened but why it happened with the intent of preventing it from happening again. >> reporter: now yesterday morning at around 7:20 a.m. a seven car train with about 100 passengers was traveling to grand central administration. it jumped the tracks about 11 miles from its destination. it stopped just short of the intersection with the hudson and harlem rivers. the black box has been recovered. the train's engineer who was injured will be questioned by federal authorities today. some reports say the engineer said he applied the brakes as he approached a significant curve up here on the bronx but the brakes did not work. this is the latest in a series of problems for the nation's busiest commuter railroad. this means likely that 2013 will be the deadliest for metro-north since 2007 when seven were

reported. it also means the commute for those taking metro-north's hudson line which serves about 19% or 53,000 of its average weekday passengers will be disrupted until the mta can repair the tracks. that won't happen until the ntsb includes i had investigation. the ntsb is expected to hold a press conference and we'll bring the latest to you when we have that information. >> thanks, mary. joe? >> scary. we took the train twice since i've been in to work on thursday to go down to the parade and then we went to a rangers game. then the next morning, shocking. it's the last thing you're thinking about around the holidays, that all you're trying to do is get somewhere. >> you think you're doing it safely. >> right. exactly. just really bad story. >> my family's been traveling metro-north for 50 years. >> yeah. i mean, it is a rare thing

and -- but i -- i saw some of the coverage and i recognize exactly where that is, you know? i mean, it's right outside the harlem river. >> hovering over us. coming up, much more on the buzz story we're calling it of the morning. amazon testing the -- delivering some packages using drones. i guess anything is possible. i mean, the jetsons was in the '60s, right? >> taking a long time to get to that. >> that was a cartoon? i know that. but you can talk about the possibility of these things long before it's really going to happen, can't you? we'll have some comments from jeff bezos. he'll never be on our show. first as we head to break, alex wilson joins us from "the weather channel." >> we're talking about our newest winter storm. snow and rain are coming to

parts of washington and oregon this morning. a lot of the western part of the u.s. going to see that. parts of idaho and montana. around fargo, minot, wintery mix from bismarck over towards min knee app poe lis. duluth, snow. cleon bringing wintery mix to places like minneapolis. snow through parts of north dakota and northern minnesota. even on to wednesday we've got more snow ahead for parts of minnesota and the dakotas. rain/snow into places like green bay. here's your snowfall forecast, 18 to 24 but in this deep purple a foot to a foot and a half. snow isn't the only story. we're talking about some very cold temperatures. arctic invasion pressing south ward as we go through the week. much colder air. we are talking about serious and dangerous cold. these temperatures are going to be plummeting. 35 today in great falls. 25 in minot.

might think that's cold enough. no, tomorrow, 7 in great falls, 14 for a high in minot. by wednesday, minot will hit 1 degree for a high temperature. by thursday, minot, north dakota, this is your high temperature. minus 7. we'll be dealing with lows minus 18, 19, 20. minot, north dakota, today 14, tomorrow 1, minus 7 and minus 12 by the end of the week. we'll be back after the break. every day we're working to be an even better company -

and to keep our commitments. and we've made a big commitment to america. bp supports nearly 250,000 jobs here. through all of our energy operations, we invest more in the u.s. than any other place in the world. in fact, we've invested over $55 billion here in the last five years - making bp america's largest energy investor. our commitment has never been stronger.

right now right now to start the day with executive edge, this gives business leaders a leg up. amazon is testing delivering packages using drones. the unmanned vehicles that could drive through the air, that will represent 86% of the packages ma'am zon delivers. >> i know it can't be before 2015 because that's the earliest that we could get the rules from the faa. my guess is that's probably a little optimistic but could it be, you know, four, five years? i think so. it will work and it will happen and it's going to be a lot of fun. >> yeah. >> he's even starting to look like megamind to me now.

you know, i'm going to take the other side now. >> oh. >> if someone had told you ten years ago that you would be walking around with a little thing that you could watch tv on and send, you know, wireless messages, we wouldn't have believed that either. >> four to five years from now? what concerns me is there's a limited amount of space. i think people try and work these drones. >> there's really not a limited -- if you think about how much is up there. you look at how many planes are flying at any given time. >> do you know what they call this corridor right down the hudson next to our offices? this corridor down the hudson, they call that suicide alley. there are so many plaines. the fact that you put drones on top of all of those things. >> drones seem to be big enough where if you hit one with a small plane, even if you hit one with -- i don't know, how high

do they fly? there would be a lot of -- you know, you have to have a lot of air traffic control. >> we need the rules from the faa. >> but i also as they're coming down, you don't want one landing on your head. >> right. >> you know, because they're -- you know, to keep something heavy in the air, it takes a lot of -- >> massive power on the whirlie. >> i think the two of you guys should just get used to t. it's coming. drones are coming. >> i think it's coming. >> they're going to be an efficient way of delivering goods. >> it's exciting. >> big game changer. >> i can't get a pizza in half an hour. i'm skeptical about the -- >> you know, becky, that may be another possibility. it takes a while. can you imagine a pizza delivery -- it captures my imagination. i'm ready. >> i think 2015, i'm not necessarily buying that. >> he admitted himself, 2015 might be optimistic. four to five years. if you're saying four to five years down the road you have to reassess but i am highly

skeptical. >> we'll see. it certainly is a buzz story everybody is talking about. i guess if you look -- is there a way to check twitter? look at the hash mark and look at drone? >> i'm interested in drone decals. you have your own drone. >> advertising on it? >> advertising on the drone. personalize your drone. i'm already in the drone business. >> will the sky ever look ugly, like locusts? i mean, would there be so many flying around? >> they have their own on board radar, they avoid each other, use the global positioning system. >> i still use a blackberry. i'm the wrong one to ask about this. >> i have a lot of questions. altitude. >> even when it lands on your front porch, what do you do? it stops and you reach out and you push it back out? >> it drops it and flies away. >> it drops it and flies away so you hope it doesn't drop the book on your head. >> you can't sign for things? >> no. you could acknowledge it.

>> acknowledge it with your smart phone. acknowledged delivery. >> i don't know. i think it will take a lot longer than four to five years. i'm not saying forever. in 2018 who wants to take a bet that these r landing on your doorstep in 2018. >> i had a vision of amazon as the big, bad corporation in the futuristic movies. they'll be everything. the stuff that they're into -- >> i will take 100 bucks from each of you and say -- >> inflation adjusted $100. >> regular $100. >> nominal bet. >> i had a tweeter -- something with jonathan waller about robocop and that that corporation was really bad. >> i just saw robocop last week. >> they were protecting a city, a crime ridden city.

>> it was detroit. >> it was detroit which was kind of scary that they picked that. >> can you imagine our great leader jeff bezos with that laugh? >> do we put -- do we put it side by side with megamind? that would be mean. >> exactly. >> tell you guys about the next story. china launched its first ever extra terrestrial landing map en route to the moon. it's being haled as a major milestone to the science program. china will send someone to the moon in 2020 now that we can no longer send someone to the moon. >> we know what's there. we're worried about what they want to use it for at this point. what is this jade thing, it drives around? >> yeah, like a buggy that will go around and check out the surface. >> maybe if it drives everywhere

it could find a moon rock more interesting than what we've got. if they could cover the whole rock, the whole satellite. >> maybe they're going to deliver packages. >> maybe they're going to do that. >> deliver amazon packages to the moon. >> i love the moon, it's beautiful. it makes you feel nice, but i'm done with the moon. we need to go somewhere else to make it interesting. >> one of these 40 billion earth like planets that are supposed to be out there nerds, listen up. the largest known private memorabilia collection from the "lord of the rings" collection will be released this week. there will also be props used by the evil ring reichs, prosthetic hobbit feet, boots, shields, vests, arrows and more. if the items reach their stated guide prices this auction will

bring in more than $1 million. >> i'm not buying this. this isn't the actual sword that froto used. >> yeah, it is. this is the sword from the -- >> this is not the one. i understand what you're saying, joe. >> this is from the movie. >> if you told me you could get me a sword that glowed blue, would i have use for that. >> this is from the movie that they made about the actual events. >> yes. coming from a guy who has a model of the walking dead sword. >> no one knows about that. that's going to be a christmas present. ixmay on the presentmay. >> "the daily beast" was going to have a story. >> you would not have brought up that sword.

you would not have brought up that sword. >> i don't want to buy actual movie props from a movie that's five years old for $100,000. maybe the maltese falcon or something that withstood the test of time. these are great movies. >> what would the real photo sword be? >> middle earth. >> i don't know. >> some of the hobbit feet. prosthetic hobbit feet. put them on you. >> we don't know about your whole thing with feet. you never told us about that. you would buy harry hobbit feet? >> no, i would buy them for you if you agreed to wear them around the set. it would be good. when we come back, we're going to talk about the 12 days of christmas investor style. what the cost of things in 2013 dollars can tell us about inflation. "squawk box" will be right back. over the next 40 years

the united states population is going to grow by over 90 million people, and almost all that growth is going to be in cities. what's the healthiest and best way for them to grow so that they really become cauldrons of prosperity and cities of opportunity?

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it's that it's that time. we're calculating the real cost of christmas. the 34th annual pnc christmas price index. joining us from pittsburgh, jim dunnigan, chief investment officer from pnc. anything go down in price? >> no, nothing that went down in

price was the pear tree this year. the only item, decrease, 2.9%. >> you have to buy the pear tree and the partridge? >> that's the item in the song, absolutely. >> so you have to have the tree and the -- okay. so what was the -- what went up the most? >> the most this year were the nine ladies dancing. increase, the ladies got a 20% increase. they had not seen an increase in the last two years so they're playing a little bit of catchup. >> now, you know, you had to go the there. who are these women and where are they dancing? how did you pick what to call dancing? these are ballet-type dancers? >> over the 30 years we try to keep a lot of consistency. we use philadaco. the pennsylvania dancing company.

leaping. >> and if you did have to count dollar bills to figure out how much a dancer costs, that would be a lot more -- >> that's the other part. i think they call that crowd funding in the investment world. >> okay. i saw this movie, jennifer aniston is a stripper. how funny is jason effing. >> i can't believe i missed it in theaters. >> she says, i only take 20s. >> yes. >> anyway, did we ask you what the lords a leaping is? >> yeah, let's get back to that. >> i repeated the same line. no, it's a really funny movie. you have to see it. >> how inappropriate was that movie? it even showed the guy after he got bitten by the spider. my kids saw it. one of them. okay. we have the ladies dancing. what else went up a lot?

>> the musicians went up. 2.9%. similar to the overall event. our service side went up. >> what about gold rings? >> gold rings had no increase, becky. i think they're working more on the fifo inventory, first in, first out. trying to sell rings from last year's prices. >> those should have gone down, jim. >> the big part for us is our website, you can go in and build each of the individual items in the workshop and educators can get lesson plans to use in the classroom. >> you don't use sugar for any of these things, right? sugar has seen a big decrease in the last five weeks. sugar prices have dropped pretty steadily in the last five weeks. there's nothing surprisingly in the 12 days that uses sugar, right? >> if you remember last year, becky, we had the drought in the

summertime which drove up food prices and grain prices. >> right. right. >> which caused the bird costs to go up. this year both energy and food prices are down. >> we were going to play a little music or something so the total price is, did you tell us that already, $27,993.17. up 7.7% this year, joe. >> 7.7. inflation. all right, jim. thank you. >> good to see you. happy holidays. folks, it is cyber monday. that's when people return to work and do some shopping online. we're going to talk about ecommerce prospects when "squawk box" comes right back ♪ ♪ the most wonderful time of the year ♪ capital to make it happen?

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welcome back to "squawk box", everyone. in our headlines this morning, newly named nobel prize winner robert schiller is warning of a u.s. stock market bubble. schiller said that he believes sharp rises in equity and property prices could lead to a dangerous financial bubble and may end badly. he describes the financial and technology sectors as overvalued and says, i am most worried about the boom in the u.s. stock market. also because our economy is still weak and vulnerable. he's talked about irrational exub ber rangs in the past. when he wrote it last time there were still several years. >> he said that. and in what i read, he said, not yet. i'm not saying we're here yet. >> right. you can't be always right with the timing. he sees stuff starting to build up and he's worried about how it will end. >> now we listen to him more

because he has a nobel price. >> and the case shiller index. >> i saw it on one of the aggregation sites. nobel economist. oh, it's shiller. yeah, because he just won. anyway, that gives you some additional -- you think it matters. i -- >> you don't? >> no. >> winning a nobel give you anymore foresite? >> it's not a nobel. he did not set aside any money for economic prizes, alfred nobel. >> in the '60s. >> the society made this up. >> should we recap the running five-year debate over whether the nobel is a real prize as okay no, ma'am mix and science? >> you were an english guy. i think there's a lot of smart guys doing a lot of research there. that's all. >> they do a lot of research and one ends up saying up is up and the other says up is down. >> they both get nobel prizes. >> all physicists agree.

there's no objective truth. >> amazon is having seven days of deals. they'll offer deals as early as every ten minutes. with us is victor anthony. good morning, victor. >> good morning. >> let's get this out. the drone story? >> i can't say i anticipated that one. >> you're a really good analyst but you didn't anticipate that one. >> i was somewhat surprised. i can see it working in rural areas. in densely populated areas i'm not sure. >> would it make sense. you weren't using them constantly. you can use them in highly populated areas. >> it will be the worst place. i would imagine you have to be home. >> is there a serious stories in the drone way? >> this is a story that's so

big, profitable, ubiquitous that they're actually doing drone research. does that tell you something about just how big a company this is, amazon, how profitable they are. >> google and amazon, those two companies have become the new bell labs of today. >> a lot of the innovation that we see coming out of the u.s. is coming out of these companies facebook to some extent as well. jeff bezos has stepped into the shoes of apple's former ceo. >> that's futuristic. >> so bezos is the new steve jobs? >> i think so. >> based on what? not just the drone story but other research and stuff they're doing? >> other innovations? >> his ability to put the amazon platform into other areas. he has aws which is a client services business which has become essentially the largest

cloud services business. >> and the -- >> that's a smart take on it. he's a really thoughtful guy. he does a lot of time big thinking like steve jobs used to do. >> he does. i think so. >> let's talk about the retail season and how amazon is doing versus ebay. what's caught your attention? >> for me over the weekend, the big story was e bay, the stock has been flat. amazon is up over 60%. the first three days of cyber five, thanksgiving, black friday as well as saturday, sales up 30% up year over year. amazon was up roughly 30%. most third party data sources were high teens, low 20s. it took a lot of market share. that was surprising to me. >> can we go back to the ebay chart? that's a highly volatile stock, right? >> they gave us really robust

thr three-year forecast. >> it feels like a penny stock. >> a few weeks later they came out with actually missed numbers in the first quarter of 2013. so the stong has been extremely volatile. there's been periods of time where there's been competition for paypal. that's taking the stock down. >> you like it here at this level. you like did relatiit relative . you think the numbers for the holiday shopping season are better. >> if they sustain cyber monday, i think it will be a significant shift in the stock and the stock is likely to go well. i think this is a huge positive for ebay. i like it here. >> victor, thank you for joining us. we'll check in. keep your insights coming. >> thank you. thank you very much. >> victor anthony. coming up, a drop in corporate bankruptcies and what the stat tells us about the state of the global economy. we'll be back with more "squawk box."

>> announcer: all this week, "squawk box", the higher learning project. education reimagined. disrupting the classroom, putting universities to the test. how innovations and technology will lead the work force of the future. education advocate, former senator bob kerry kicks off his exclusive series today at 7:00 a.m. eastern time. [ male announcer ] this store knows how to handle a saturday crowd.

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with historically low interest rates and easy access to capital, bankruptcy filings are down 12% this quarter compared to last year. alex partners is an advisory that specializes in corporate turn around and restructuring and fred crawford is the firm's ceo in -- okay, so year-over-year, what about last year versus the prior year? was that down, as well? >> it was, you remember in the '08/'09 financial crisis, we saw credit markets froze up. since then, with the fed's policies along with very accommodative interest rates and lending policies, we've seen really historical low restructurings for the last three or four years. >> if you have declared bankruptcy with the fed at zero and with all of this accommodation, you should probably get out of the business of managing -- of trying to start a business. if you can't start a successful business in the last couple of years, you've got problems, right? >> for sure. and certainly in an environment like this, companies that

historically would've went into bankruptcy -- >> have not. >> have not. >> they've had time, the ability to push out or restructure their debt. and it's given lots of businesses the opportunity for longer runway to recover. >> are we in a position where the old expression is that when the tide goes out, you get to see who had a bathing suit on and who didn't have a bathing suit on? everybody, the tide is not going out are we covering up companies that should not be in business? and is that hurting the more efficient companies that they're allowed to stay in business? >> yeah, what i really think is as many times as you know in the u.s., our bankruptcy code is there to allow for a second chance kodak emerged from bankruptcy successfully. >> it wasn't successful. it was a nifty fifty. what are they now? >> right. .

business to business company now. >> do you know offhand? >> i don't know offhand, but they've had a very good start in the new world. gives firms a second chance and new leases on life. and in this situation, we're seeing companies extend. >> so what -- in terms of size, how do you break up the universe that you're looking at? in terms of sales or market cap or what? >> we look for the amount of debt, the term of the debt and whether or not a company's cash flow will allow -- >> are big companies going bankrupt? who's going bankrupt now? >> it's small firms. >> small. that are how old most of the time? >> hard to say in terms of age. but it's the firms smaller and less access to capital. >> we know that three out of four fail the first time around. there'll continue to be, this is a normal process of doing business. >> that's right. >> are we down to '07 levels yet? >> we are, we're below that, as a matter of fact, historically

low levels of corporate default. >> so no one at this point is really -- a year from now, can it drop another 12%? >> no. >> is this something that we should watch to gauge how the economy is? or is it more of a reflection of the fed? >> yeah, my guess is that with fed beginning to hint at an end of the policies now and history would show over multiple decades that corporate default ebbs and flows. we've had a three or four-year run. our expectations -- >> you could probably see this in commercial real estate. the other shoe never dropped. everybody was able to roll over a lot of debt because of this is another effect of the fed's easing -- >> you heard the term, kick the can down the road. a lot of restructuring of debt and refinancing as opposed to outright -- >> you wonder -- is this another dislocation from this, steve? that none of the companies that maybe --

>> i think you're overstating it a little bit. there was a lot of trouble, the people who went out of business as a result of the crisis. some are probably in business as a result of it. >> everybody can get credit? >> not everybody. >> it's the big firms that have access to -- >> big firms had access to it and maybe one of them would've gone under. >> any long-term negative effect of all of the big companies being able to float 30 year stuff at zero? >> i think what will happen is as with most cycles, we've had a prolonged low value, if you will. and i think when we secret tighten up and interest rates pop up, we will see higher than normal levels of corporate default. >> there'll be naked swimmers then. all right. all right. when we come back, we'll have this morning's top stories, including amazon drones, holiday retail sales and much more, "squawk box" will return after a quick break. ♪

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click click and buy, how two of the nation's biggest shipping companies are handling the volume without drones. we'll get an update from the fedex distribution center and speak to the cfo of u.p.s. we kick off the higher learning series. executive chairman and former senator bob kerry joins us. and the first day of trading for the last month of 2013. we'll preview this month's jobs report as the second hour of "squawk box" begins right now.

good morning, everybody. welcome back to "squawk box" here on cnbc. i'm becky quick along with joe kernan and steve liesman. we've been watching the futures this morning and they're barely budging as we head into the first trading day of december. again, this comes after a month of huge gains. this morning, you see the dow futures down by 6 1/2 points, s&p by under a point. remember, all three are up by better than 20% for this year. this is the day that online sales surge after the thanksgiving weekend retailers are hoping they can make up for the holiday weekend when the national retail federation says the total spending fell by 2.9% compared to a year ago. a retail reporter courtney reagan will join us with more in a moment. etfs continue to be popular. that is the sixth month in a row of gains. however, that was actually a

slowdown from october's 53.2 billion. we also have two key reports on the u.s. labor picture. the monthly adp report will be out on wednesday morning why the gulf's november jobs report is set for saturday morning. 173,000 new private sector jobs expected, while they expect friday's numbers to show 180,000 new nonfarm jobs. a deadly derailment in new york. four people were killed, more than 60 injured after a metro north commuter train derailed in the bronx. mary thompson on the scene and will bring us an update in a couple of minutes. also in our headlines today, the global headlines, iran is saying it wants stronger cooperation with saudi arabia. it's trying to ease concerns about a potential resurgence and influence after a deal with arab powers. some proliferation experts are worried the deal could fuel the spread of dangerous technologies across the middle east and asia.

saudi arabia could seek to buy nuclear weapons if more isn't done to stop iran. today's guest is bob kerry who served on the intelligence committee when he was in office. and it's great to have you here today. we have a lot of things to talk about. but we want to get you thoughts about what happened with this deal with iran. was it a good thing or not? >> i think it is a good thing. >> i think, you know, this six-month freeze is worth the risk. it's not north korea, it's not kprashl to what happened in the 1990. they have a significant middle class, the sanctions were having a major impact. and this is a slight loosening of the sanctions. i think it's worth the chance. >> it is their backyard. >> well, it's their neighborhood. i'd be concerned about it, as well. but as i said, i think it is worth the chance. you have two options. take it down with military efforts or diplomacy.

>> or you could have left the sanctions in place. they did seem to be having a huge -- >> well, they did leave the sanctions in place. it actually puts a lot of pressure on iran to comply. if they don't comply, there'll be significant pressure to put the sanctions back on, perhaps even stronger than what we had before. >> the agreement, though, allows for some continuation of uranium enrichment. and that has saudi arabia so worried. >> you can keep them. they just said no new centrifuges. >> you've got two choices here. you can try diplomacy or get military action. those are the choices. >> it's not a binary world. we've seen this movie before with what happened when we appeased north korea. >> this is not north korea. it's a different country, different set of conditions. they have a very strong middle class. >> you think he's out of his mind? >> no, i don't think he's out of

his mind it's not a binary world. i'm completely sympathetic with saudi arabia and israel. >> i read in the journal and other places, people were adamantly opposed to. you're saying it's either this or military action. >> look, it may turn out to be the worst thing we've ever done. i'm saying it's worth taking a chan chance. if you believe it's a danger. the question is, what do you do about it? you either take. and we've been planning, a significant amount of planning for some kind of military act n action. this is a very big country. if we thought iraq was a problem, iran would be a bigger problem. >> we don't want to do anything that will enable them to continue to do it with lesser sanctions. >> that's right.

it's worth taking a chance as considerable amount of attention now and pressure to comply and take additional steps. if they don't, the sanctions will go back on stronger than they were before. >> we'll see what happens. >> we'll see what happens. as i said, it's a big gamble. it's not the same thing as the 1990s. it's a gamble we're taking. >> thank you, senator. we'll have more on that. amazon testing delivering packages. could deliver packages that weigh up to 5 pounds. that represents roughly 86% of packages that amazon delivers. in an interview on "60 minutes" last night, jeff bezos already has the technology in place. it could be at the earliest 2015, but he was doubtful that would happen. but the technology's there.

>> i have a totally new viewpoint because i'm looking on my screen here that says dominos, test drone pizza delivery. what was the date line on this? >> '87? >> no, but june 4th, 2013. but no one -- and, in fact -- >> is there a patent? >> they developed something. and the person covering the story called it a publicity stunt. saying in the first bit of technological research flying pepperoni, they developed a drone capable of delivering pizzas. while it's likely a pr stunt. bezos does it -- >> i think he was serious. >> so is dominos. i have a picture of it. >> the domicopter. >> multiple pizzas. >> and it's in one of their warming bags which keeps it -- >> warm. >> yeah.

>> the peaceful use of drones, i like this idea. >> you know, pizza. and now you've got my attention here. >> you could get the book. and the pizza delivered. >> you don't need a book. that comes right over. >> and if they crass, you should have parmesan cheese all over your book. >> do you know it's cyber monday? >> all over the place. >> the holiday weekend shopping sprees aren't over yet. 131 million americans will shop on this cyber monday. and courtney reagan is following the shipping action for all the online ordering all day. you were at the mall. you didn't say mall, though, in ohio. now you're in tempe, arizona. what's going on? >> i travel fast, joe, what can i say? i'm in tempe, arizona. and we're here at fedex for the first time in its history, the company expects that today cyber

monday not only the busiest day of the season but busiest day ever. and about an hour from now, the sort happens right here behind me on the conveyers and with the trucks. that will mark the busiest hours in the company's biggest day in history the bulk will be the purchases made over the thanksgiving weekend. they have to get loaded on to the trucks for delivery before the cyber monday packages can enter the queue. most think it was somewhere around 15% over the holiday weekend. because of the orders, fedex projects that 22 million shipments will be in today. that marks an increase over 2012's busiest day. and we know it no longer stands alone as a key shopping day. retailers are blurring the lines, offering week long black friday events and cyber weeks as opposed to just one day. now, ibis world projects online sales will hit $1.8 billion today. that's up 13% over cyber monday

of last year. that's an impressive growth rate. but, remember, very small when you think about how much was projected to have been spent over the black friday weekend at $57 billion. now, if you could tune into "squawk on the street" when we actually get to see some of the action of the sort the packages loaded on to the delivery later on in the day, we're going to make our way over into an amazon fulfillment center to see the new orders fulfilled for cyber monday. for now, back to you guys at "squawk box." >> thank you. >> steve was taking this opportunity to check out deals since you reminded. >> amazon.com, the kindle fire, just took $50 off. everybody in the survey says they're not using their work computers to shop. >> uh-huh. >> i'm watching, i'm reporting here, watching the deals. >> we'll talk more about cyber monday as things get moving.

we'll check in with you, "squawk on the street." >> checking out the deals on cyber monday. >> all this week, it is "squawk box's" higher learning series. reimagine the way we learn, one of the men on the front lines is today's guest host. former senator bob kerry. he's the executive chairman for research and scholarship. and we're very pleased to have you here this morning. >> nice to be with you. >> let's talk about a little bit first of all about what's wrong with higher education. if you have a child of college age, you probably know this well. if you don't, if you haven't been paying attention, what got you to the point where you realize we need to address things? >> well, i spent ten years running the university of new york city. what i saw was the primary regulators were the primary. issuing credits that transfer to another institute. and they closed the system down.

they make it very difficult for a new intern to get accreditation. and any time you've got an environment where everybody's competing in a closed system, you increase supply and demand. and we had tremendous increase since the cold war ended. and socialism is largely discredited. >> you think that's the reason that college tuition prices have skyrocketed? >> listen, you'll get price increases beyond the rate of inflation. there's nothing you can do about it. universities and colleges are intensely competitive and they do compete. but they're adding things that don't necessarily add much in the way of value. >> like what? >> oh, they add buildings, classrooms, faculty, often times aren't teaching at all. they're adding things that will enable them to recruit that marginal student. that later student, more to get that donor excited about what it is they're doing you can't make a case other than in a close system where supply is limited.

and we really need to examine, it seems to me what the regional creditors are doing. i'm very supportive of the quality they've produced. but it's time now for them to try to grant. let me put it this way. if you said to me, i got $1 billion and i'd like to do one of two things, either start a college that's going to be teaching political science 101 or a heart transplant center and the only variable that matters is the length of time to get regulartoritory approval. you can get regulatory approval in the time that you can do political science 101. it demonstrates the problem we've got. we've created this logjam. >> what's wrong with the accreditation process? >> what's wrong with it is, let's say i'm the accrediter and you say i want to start a college. you can't even apply to what you'd say -- >> how do you get kids to come if i don't -- they need to start

giving regional accreditation prior to the admission of the first students and raise the bar. tell me what your standards are. and i think the regional creditors are looking to do just that. there's a lot of pressure on congress. they're starting to pay attention to these entities because these six entities determine who does and who doesn't get regulatory permission to sell their credits. >> we're going to talk more later in the program. but it's not accredited yet. the problem with -- let's look at any of the schools, state schools, could you fix those schools from within? or when you left the new school, was that your thought that you have to come from the outside to change things? >> well, it's difficult to do it. you get alumni with the exceptions of the schools that have great revenue coming off of

espn, it's possible for them to make money, but all the rest of them lose money and that gets billed to the undergraduate students. a lot of support, a lot of political support internally. you've got all kinds of work rules that make it difficult to do what you want to do, which is to manage the cost down and quality up. >> in tenure? >> and all kinds of other rules. any kind of business entity knows it has to manage the quality up, keep costs under control and that's almost impossible to do in the current regulatory environment for higher education. >> and those are the key things that this -- we're having an argument now about everything. in terms of whether the profit incentive is positive or negative. we're seeing it in health care right now. and we've got one side that says the administrative costs and satisfying shareholders and in the case of for profit schools, you'd be bringing in students that shouldn't be there just to make more money and you're greedy and seeking money. and the other side says, wait a

second, without the profit incentive, there's no profitability. there's no reason to mind your ps and qs, and we're having this huge argument right now. and i think partly because the obama administration about whether the profit incentive is even relevant in today's world. >> i think that's a fair point. i think it's a very important argument to have. by the way, higher education, the for profit guys are the ones paying taxes, both property and income taxes, whereas the not for property guys are the ones receiving subsidies. as far as i'm concerned, money is money. the only difference in private and public money is ideological. you draw a line between the two. public money becomes purer -- >> but it's worth ten cents on the dollar. >> i don't disagree with you. >> you're one of the old democrats. you're looking around saying what am i. >> i don't -- by the way, it's sort of what we were talking about earlier with iran. i don't think it's a question of choosing one or the other. i think you need to have a

healthy balance of both. but if you start off with a regulatory bias against the for profit sector. >> you do. >> i understand, i don't disagree. >> i'm appealing to you, stand up and be -- >> i'm sitting down -- >> i think bill clinton was a republican. are you sure he was a democrat? >> i have no idea. >> senator kerrey will be with us for the rest of the program. >> do you want to be called senator or governor? >> you can call me bob. >> he wants to be senator. don't call anyone governor. >> walking dead, don't spoil it. up next, dow chemical announces significant revamp, joining us after the break. and later this morning, what brown can do for you this holiday season. we hear from the cfo of u.p.s. about how to handle the holiday rush.

dow dow chemical has announced its intention to sell part of the commodity chemicals business representing up to $5 billion in total revenue. and joining us now is the president, chairman and ceo of the dow chemical company. andrew, it's good to see you. and we always kind of grapple with this. business is attractive to someone. it's a commodities business. a good business, a steady business. why is it attractive to someone

other than dow? why is it more attractive to the buyer than to you at this point? >> so, joe, the last many years we've been on a steady drum beat of exiting commodities businesses because of the cyclicality. we've been investing in growth businesses. we make the chemicals that make the chips that go in the servers that enable online retailing. that's a growth business. or we make the packaging that keeps fresh meat fresh in grocery stores. with this move, as you say, these are good businesses. makes them even more attractive. chlorine. it's a good molecule. we're not in that. so we know there are people out there who have expressed interest because we've been working on this for about 12 months. it's really as we exited commodities plastics, this is the next tranche of commodity chemicals of dow to make us a high-tech, high-margin, steady

earnings grower in markets that are growing. >> i can see how i would like to buy some of these because of what you just said. the input costs will go down so much given the energy boom here. seems like you should get a much better price for these things than you would a year ago or two years ago. >> i think the timing is exactly that. if you look at overseas interests in particular in american shale gas, there are a lot of emerging country players who are very interested in that low energy imports. and we've been in chlorine for 100 years, joe, this is the ultimate commodity. we literally, when i say invented it, invented the process to make it. >> right. >> i didn't think he founded that. >> well, he may have, but i mean, at the end of the day, we're the number one player in the world and putting chlorine and related assets up for sale or put it in a business model where somebody will benefit from it, i think the timing is

perfect for us and for the buyer. >> and you don't need any of this for any of your other businesses? so it's not like all of a sudden you don't have access to what you're getting rid of at this point. you can move on, make sense to be a growth company instead of a commodity company in terms of margins. >> chlorine, we'll put it forward and make an agricultural product or chemical product out of it or polyurethane. we'll keep all the value add part for dow because we're going downstream as i said a few minutes ago. but for the commodity pieces, pvc is a commodity plastic. dry cleaning fluids, they've been commoditized for a long time. so exiting commodity chemicals is the move we've announced today. this is a complex carve out for dow. i mean, to move it out of our systems, it's going to take us

12 to 24 months but we've made the decision to do it and that's the announcement this morning. >> it represents how much just quickly of the -- what's 5 billion? >> well, 5 billion in revenues is what it'll be. 2,000 employees, 11 manufacturing sites. >> it's about 15% of our asset price. >> and the economy is a 2% economy you see right now or 3% economy? in your view? >> right between your two numbers, in my view, joe. >> it is? >> yeah. >> so it's okay. we want it to be better, obviously. >> all right,mate. that's what you call each other there, right, mate? see ya. andrew, thanks. coming up, a deadly train derailment in new york yesterday, details at 7:30. and then, what if you could send your kids to college for four years for free? that's the bold approach of the project. ceo ben nelson joins us to talk higher education in a few minutes. she loves a lot of the same things you do.

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the the futures this morning, not much movement at this point, but remember, you are talking about markets that are up better than 20% for every one of the major arranverages. s&p down by about 1.8 points and the nasdaq up 2.5 points. up next, the ceo of the minerva

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welcome welcome back to "squawk box." in the headlines this morning, though investors are focusing on wednesday's adp report on friday's government jobs report, we have two sets of economic numbers coming out this morning. management is out with the monthly manufacturing index and the government will issue both the september and october reports on construction spending, both are out at 10:00 a.m. eastern. we have more information this morning on the planned initial public offering by hilton hotels. hilton now says it expects to price about 113 million shares of $18 to $21 a share raising up to $2.4 billion. hilton has increased the size of the planned offering several times now. it's currently owned by blackstone group. dow chemical announced the intentions to sell part of the commodities chemical business. the unit comprised of about $5 billion in annual sales. dow says this continues its move

to emphasize higher margin businesses, the stock moving higher following the news. it's chlorine they're getting rid of. a molecule they've been creating. >> they invented it. invented chlorine. it's weird. who invented the other elements? >> dupont the other half. >> dupont did? >> dow did one-half and -- yeah. tough segue. a commuter train derailed on sunday. the ntsb has recovered the data recorder. it's going to continue the investigation today. mary thompson joins us from the bronx, new york, with the latest. and immediately we heard the guy was, i don't know, trying to hit the brakes, mary and, you know, it's like a 90-degree turn. you're going 70, got to get down to 30. that seems like they'll focus on that, i guess.

>> that's certainly one of the things they'll be addressing, the ntsb. i want to give you a sense of what we're seeing. we're couple hundred feet above the accident site. and there are police boats and they've also brought in two cranes. we could see four or five cars that turned over on their side. they've turned two of them upright and put them back on the tracks right now. this kind of work will continue throughout the day. the ntsb will conduct an on-site investigation from anywhere from seven to ten days. and as part of that investigation, ntsb board member says today they will interview the train's engineer. >> we'll certainly want his recount of what the situation was, what actions he took, and any observations he has. >> the engineer and 62 others were injured when the seven-car train jumped the tracks 11 miles

north of grand central station. four passengers are confirmed dead and the ntsb will be looking for other victim when it uses these cranes to right the trains overturned yesterday. in addition to interviewing the engineer, investigators will be inspecting tracks and gathering accounts from passengers to help them determine the cause of the accidents. now, reports say as joe mentioned earlier that the engineer told others he tried to brake before hitting the significant curve in the bronx but the brakes didn't work. for commuters, of course, the accident will disrupt services on the north hudson line. this serves about 53,000 passengers on average during each weekday. although the latest in a series of problems. it is the busiest commuter rail in the country. sunday's fatal accident means the 2013 could be the deadliest four metro north according to

the railroad authority. in 2007, there were seven fatalities, but if you total up the number in 2013 and add the four victims that were killed yesterday, that would make this year equal in fatalities to 2007. so certainly a tough day for metro north. and, of course, all those passengers and their families who were involved in yesterday's accident. back to you. >> it's commuter too, right, mary? would it have been worse on a weekday? i guess, huh. >> much worse on a weekday. there were probably 100 passengers on this train which was traveling to poughkeepsie to grand central station. it was early in the morning 7:20 in the morning. so, again, it being a sunday and early morning on a holiday related sunday, as well. there were few passengers. but, again, you know what's interesting, joe, i asked the ntsb, are all the passengers accounted for? and they say we can't tell you right now because it's an open situation. passengers get on and off and there's no accounting for

whether or not they get off on the right stop and whether or not they have everyone accounted for because everyone may not use the credit card and pay for a ticket. >> all right. >> so it's tough situation. >> it is. all right. mary, thank you. we appreciate it. >> "squawk's" higher learning series continues with the minerva project. it is offering something that even harvard can't. four years of free tuition for the first class. this is an attempt to create an elite university for the 21st century. joining us now is ben nelson, the founder of the minerva project, also bob kerrey, the executive chairman for the institute of research and scholarship which administered scholarships and student loans. ben, welcome. >> thanks so much for having me. >> for people who don't know what the project is. bob talked about it earlier this morning, how did you come up with this idea and why? >> well, the idea really comes from trying to create a

university that's built to train the people we all would like to see in the important positions in the world. so if we were to be able to train our future presidents, prime ministers, et cetera, how would we create an institution that does that? and it's actually interesting because that is effectively what the ivy league and others are doing but really come to their point through a process of evolution as opposed to through a design principle of what you want that experience to be like. that's what minerva is trying to create. >> where did you go to school? >> wharton at the university of pennsylvania. >> and you thought you got a fine education, i take it? >> i did. i enjoyed my education a lot. but i think if you look at my transcript, it doesn't look like a typical wharton or penn student's transcript. i took courses from all different parts of the university. i spent a lot of time trying to design my education.

and the thing which was interesting was it was all based on units. so there were just interesting class here, interesting class there. but there's no connection between them. and even though i spent so much time trying to reform the university when i was there and trying to work on my own education, when i graduated i actually realized i wasn't as well prepared as i should have been coming out of an ivy league university for the workplace. >> what did you think you were missing at that point? the ivy league education didn't offer? >> well, i didn't really know what i was missing, but my employer did. i went to work for a consulting firm. and my first six months there, not only for myself, but for all of my colleagues that came from every ivy league school you could think of. they spent the first six months of our work time teaching us how to think. >> not just specific tasks? >> no, actually the specific tasks, wharton trained me extremely well.

>> isn't that what the thing that teaches you how to think? >> that is exactly what it's supposed to -- >> if you leave college not learning how to think, then you left college too early. >> what happened to you? didn't you have liberal arts? >> what does minerva do differently? >> the question is, how does a liberal arts education teach you how to think? and that's exactly what it's supposed to do. what happens is that the assumption is you study a subject matter. and by analyzing that subject matter, you're supposed to abstract those things and apply them to other things, but that process supposed to happen by accident. it's not purposeful. the goal is to teach you that subject matter. >> if you are an electrical engineer or if you've had four years of calculus and physical chemistry and physics, you're

telling me a liberal arts person knows how to think better than someone who has had all the science and math? i'll take the science and math person any day in terms of learning how to think. sorry. >> no, gi agree with you, joe. >> you do. >> i took calculus. >> liberal arts calculus. that's like algebra. >> people do say it's in engineering schools. and that's because engineering schools teach you how to deal with problem solving all the time. >> right. >> but there's no reason why liberal rights education shouldn't be able to do that. it has to be restructured in order to teach you those elements and then allow you to transfer them. >> what does the curricula look like? >> we spend our freshman year actually learning the components of critical thinking. we call them critical analyses, creative thinking and effective communication skills. now, those skills comprised that freshman year aren't delivered through studying a subject. it's actually by studying what those habits of mind should be in students as they go and tackle problems in the future.

and then as they take more specific instruction, then what the students get to do is exercise what they learn their freshman year. and, in fact, they get graded in their upper level classes on how they do in the freshman year so the freshman grades don't get finalized until they graduate. >> bob kerrey, who are some of the other well-known names? >> sure, our founding dean is steven koslin. he was formally at harvard. and we managed to lure him away from stanford to join us. dan leavitton, our dean of arts and humanities, one of the top-selling science authors of the last decade wrote, "this is your brain on music," it's a great book. and so he's in charge of arts and humanities. eric bonabo one of the foremost

thinkers is in charge of confrontational science. we put together an extraordinary group of deans to lead minerva. >> one is that employers don't seem to be satisfied with the skills that students coming out with. and two, is more and more students we were hearing are concerned about the value proposition. >> all right. >> it seems to be an attempt to address both of those. >> there's another way of describing the difference between minerva and other universities. if you go to almost any university and show up for class, you're going to pass. and you keep showing up for class, you're going to graduate. is that the way it's going to be at minerva. >> no. unfortunately, at most universities you don't need to show up for class anymore. but at minerva you have to attend. 100% of the classes are limited to 19 students.

no lectures, no concept of knowledge dissemination. because effectively that, as i'm sure you'll find out, is going to be free. the concept you need to learn microeconomics or basic calculus by sitting in a lecture hall. it's absurd, you can do it online. our classes are about active learning and you get assessed by what you do in class as well as what you do in group projects and homework and tests. if you don't show up to class, you will fail. and we take education very, very seriously. the curricular design is at the heart of what it's all about. >> we're out of time and they're yelling at me. but accreditation process. when do you think you could get accredited? >> well, we're going through the process now. we have just an amazing partner through kgi. and they're an accredited institution. we'll be housed within kgi and we expect to have that authorization by next year. >> the first class is fall of

2015? >> first full class is '15 and we have a small founding class in the fall of 2014 to go through the freshman year and then join the rest of the students in their sophomore year. >> well, we want to thank you very much for coming in today. it's interesting and i'm sure we'll be hearing a lot more about it. >> thanks for having me. and u.p.s. getting set for the holiday rush. we'll hear from the company's cfo. take a look at the futures we're watching this morning. not a whole lot of action. [ tires screech ]

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welcome back, welcome back, u.p.s. expecting a 10% increase in volume as holiday shipping increases. good morning, kurt. >> good morning. >> how is it going? are you on track for this 10% hike? >> well, we think so. we'll see today is, you know, one of our biggest operational days. we expect to pick up almost 32 million packages today. all reports are over the weekend that demand was solid, certainly we're seeing expanded use of the internet. so in a lot of cases, what we

see come into our shipping network is greater than the aggregate retail sales numbers and it's an exciting time of year for us. >> what do you make of the report that sales actually fell over the weekend compared to a year ago? >> well, you know, there is -- i think you have to be take it all in aggregate. i think for u.p.s. with the continual migration toward ecommerce and shipping on the internet, we do see greater growth than the statistics. one of the interesting things we're seeing is even brick and mortar retailers now are more and more focused on their ecommerce applications and using their retail outlets as distribution centers. we're making pick-ups at hundreds of stores on a daily basis for local dlelivery. and that's one way that retailers can compete with great companies like amazon. >> can you tell us how the shorter shopping season affects u.p.s. and delivery? >> yeah, what's that really going to do is compress the, you know, the normal volume during

peak season into less days. there's about six less shopping days between thanksgiving and christmas. and so we think, you know, the aggregate amount of shipments over the holiday in total will be up modestly. but what it does is compresses our volumes down to where our volume per day will be up over 80% -- or 8%, excuse me. we expect today volumes will be up over 10% of last year with over 32 million shipments. >> kurt, when and has. p.s. tested tested the feasibility of drone delivering? i'm not joking. >> well, we're -- we're staying real busy. joe, we're staying real busy learning how to be as efficient as possible. >> i'm not kidding. >> delivering on the ground. >> kurt, do you know -- honestly, you have not even looked into the feasibility? you're going to be kodak, you're going to be making silver film when everybody has a digital

phone. you have not looked into this feasibility whatsoever? >> we've certainly heard anecdotes of people -- of trials in china and certainly amazon is talking about it. i think that's a long ways. >> really. i don't believe you. i think you've got double secret code name at u.p.s. for doing this and you're not telling us because you're worried about fedex listening in and -- or the post office or something. you haven't looked at a feasibility study of this down the road? >> well, joe, 36 years ago i started with the company as a delivery driver and maybe we're just hesitant. i think the u.p.s. driver will be there delivering packages -- >> well, if you're not doing it, i don't think it's going to happen. >> i'm looking up drones in china deliver packages even a birthday cake. it's a cnet.com story. >> i don't see how -- someone is missing something. >> i'm imagining one of those trucks, you know, comes to your house, delivers the package, gets back in the truck, the

blades come out from the top of the truck and the -- >> you wouldn't need a guy. >> right from your -- >> i'm less convinced it's going to happen. because you guys would be -- you actually -- >> can i ask him a serious economic question? >> this was not -- >> if amazon's talking about it. i'm actually not kidding. >> kurt, can you give us a sense of the most important question out there? which i agree, drones are the most important question, maybe the second most important question, is this shopping season going to be better, worse or the same as a year ago? what can you tell us from the early results of what you're hearing from your outlets? >> well, i think the large retailers we talked to are cautious this year. they do expect to see increased sales. we don't think it's going to be a huge increase over last year. i think it's going to be a little more of a cliff hanger, though, because of this tighter shopping season. all of us, u.p.s. and all the

retailers will waiting to see as customers realize they don't have as many days left to finish their shipping. myself included as a had procrastinator, we'll see a big rush, actually, the week before christmas and our largest day will be december 16th. when we pick up over 34 million packages. >> wow. >> so, you know, it will be a very busy time. and we do think we'll see a big rush into our air services in the last week before the holiday. >> and how many people did you hire, curt, for this season? >> over 55,000. >> how does that compare to a year ago? >> about the same. about the same. you know, we continue to become more efficient and use technology on the ground for routing and scheduling. so we can meet increased demand with pretty much fixed amount of resources. >> kurt, i've always wondered what the retailers, when they say they're concerned about things, i wonder if it's because online shopping has been eating more and more into their profits. obviously a big company like a walmart has walmart.com, macy's

has macy's.com. but you see it from every end. is there -- when we talk about this past week in the national retail federation says that holiday shopping dropped for this past weekend if you can count for thursday through sunday, do you see any sign of that in the stuff that you're shipping? >> well, i do think that, you know, the smaller businesses are struggling. and certainly we spend a lot of time working with small business so they can compete. it's also a differential between their revenue growth and their actual, you know, volume of their sales. so i think there's a lot of price pressure. and especially this whole black friday environment has become extremely price competitive. you have to differentiate a little bit from the revenue and profitability of it. we do think demand is increasing from a consumer side. it's just that there is very strong price pressures right now which gives all the more reason for retailers to streamline their distribution and supply chains. >> kurt, can i ask you while you're here, too, there was news

you all made about dropping benefits for 15,000 spouses of your employees. you cited that back to obama care. what happened? >> what we did, actually, was just say -- the spouse of one of our employees that is employed and their employer offers health care insurance, then we would expect that employer to cover their insurance. so we didn't drop health care coverage for anybody that couldn't get health care. and what -- then what we did -- >> what does that have to do with obama care? >> well, the obama care mandates did increase and do increase costs for u.p.s. that was -- we're managing health care inflation plus some of the increased coverage mandates led us to make a decision that now that we know that most employers will provide health care, it made sense for that employer to cover the cost of that benefit. >> kurt, thank you very much, and joe just registered uds, united drone services. so you better get going. >> you laugh. >> you better get going. >> thanks for the tip.

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"squawk" "squawk" goes shopping. the holiday season has arrived. but for the first time in seven years, retail spending actually fell over thanksgiving weekend. >> is santa claus coming to wall street? this month is traditionally a strong one for stocks, and december will begin with a deluge of data. drone delivery? how amazon could deliver small packages to your home in just 30 minutes as the final hour of "squawk box" begins right now. ♪ >> welcome back to "squawk box" here on cnbc first in business worldwide. we're going to shut down the

patent office because everything's been invented with the smartphone. >> no, here comes the drone. >> how much does it cost you for the guy to walk up to your house -- >> it's going to be done by drone. >> think about how disruptive this is. >> the notion of pepperoni pizza by drone is capturing my imagination this morning. >> i'm starting to thinking about this. i'm joe kernan -- >> chinese food. >> becky quick. >> andrew ross sorkin is off today, our guest host this morning, he's getting excited about this. he's revolutionizing the higher education industry. but drones, maybe you should have thought about this before you decided to throw your weight in with minerva. let's begin with the markets because it's december, which is historically the best month. and the dow and the s&p. i think up 25%, 26%, eight-week winning streak. the dow's only been negative five months out of the last 26. beginning with october of 2011. that means the index has been positive more than 80% of the

time. it has nothing to do with ben bernanke. here's a look at the major market returns. the dow up nearly 23%. the s&p, 27%. and the nasdaq, more than 34%. for what's ahead in december, it's been as i said, historically the best month on average for the dow. and the second best for the s&p. and the futures this morning have turned positive. but just marginally. and we've got a lot of economic stuff coming this week. among the highlights, the ecb. in the u.s., first revision of the third quarter gdp. and then the granddaddy of them all like the rose bowl, except that's not the granddaddy. on friday, we have the jobs report for november. where is it? >> 175. >> that's not the actual. as we said last year, that's not the actual number. >> i can't say, joe. >> i can't say. >> could be the number? >> probably not. >> two markets -- >> i just give you something to

twitter out there, just to tweet. >> two market strategists are going to join us onset to discuss all this in a couple of minutes. first, though, becky has a -- >> over here. >> okay. becky, are you still here, becky? has a run down of the morning headlines, going to sound better from over there. >> they are, because i'm going to talk really loudly. >> and it says global headquarters. >> a lot of things happening here. let me talk about the numbers, they are starting to come in on the holiday retail. the national retail federation reports the shoppers spent less than they did a year earlier. that almost never happens, but the average shopper spent about $407 over the weekend. that is 3.9% less than the same weekend last year. but the industry group says there was one bright spot. online sales soared and that brings us to today. this is what many people call cyber monday. jon fortt's going to talk to us about expectations in a moment. in the meantime, take a look at

the shares of dow chemical. those shares getting a boost after the company announced it plans to sell parts of the commodities chemical businesses. the assets represent up to $5 billion of total annual revenue. the ceo joining us in the last hour. >> as we exited commodity plastics, this is the next tranche of commodity chemicals for dow to make us a high-tech, high-margin, steady earnings grower in markets that are growing. we've been working on this for the better part of the year with boards, our advisers. to move it out of our systems is going to take us 12 to 24 months. but we have made the decision to do it and that's the announcement we made this morning. >> also, hilton says it plans to raise as much as $2.4 billion in the ipo. the hotel operator is owned by a private equity firm blackstone. in a filing, hilton announcing it expects to price the offering at $118 million between $18 and

$21 apiece. four people died and dozens were injured in the metro north train accident. investigators have recovered a black box recorder. they will look at this device for answers amid witness reports that the train was going too fast before it went off the tracks at a sharp curve. mary thompson will join us with the latest in the next half hour. in washington news, the white house says it has met the self-imposed goal for healthcare.gov. an obama adviser says the five-week emergency, quote, tech surge has doubled the capacity of the online portal. the site can handle 50,000 simultaneous users. but experts say major challenges remain. we'll talk to former hhs secretary michael leavitt in the next half hour. amazon testing delivering packages using drones. could deliver packages that weigh up to 5 pounds, that represents 86% of packages

amazon delivers. ceo jeff besos making the announcement on "60 minutes" last night. >> that's the earliest we could get the rules from the faa. my guess is that's probably a little optimistic. but could it be four, five years. >> amazon, the fellow online retailers had a lot on the line today, it's cyber monday, jon fortt joins us onset. your opinion on the drone story? >> well, i think it's possible to do. i worry that pranksters with -- >> my son showed me this. there's a guy that put a submachine gun on the helicopters and used it to destroy a car. the kids get these cool videos that are out there and he found this one. >> we hope he doesn't get angry one day. >> who is going to still have the money to order the packages

to be delivered if you displace all these workers that are -- >> you have automatic retail checkout that will -- >> they'll be gone. >> but seriously. how many drivers does -- >> i don't know the number of drivers, but he said he hired 55,000 people for the holiday shopping. >> questions about how it works. i have to look out my back window to see when this thing lands? >> ideally, with a drone, yeah, it could message you within a certain radius of your house. >> if you had a smartphone, it would go -- the crackberry will be long gone. >> it'll be like a camera on a drone and you can tap in and see where your package is. >> or gps, on the radar. >> all these things are possible. >> this is not going to affect this holiday shopping season? >> not at all. >> what do you make of online and the deals. looks like the online guys are sort of playing the game like the brick and mortar stores now. deals every ten minutes and stuff like that. >> they've been doing that for a while. big story is mobile.

looks like we're on track for a record cyber monday. >> collects data for more than 180 million visits to 1,000 retail sites and total online sales topped $1 billion for thanksgiving, $1.9 billion on black friday. the biggest story probably isn't the numbers itself. that's more than double last year's rate and what kinds of mobile devices were people buying on? mostly apple. generated more than three times the sales of android devices even though there's supposed to be more android devices out there. ipads and iphones alone were responsible for nearly 19% of online buying. one asterisk here. did 1/10 sales volume that ipads did. people making purchases on kindle devices, which are amazon, of course, peak times for black friday shopping were between 9:00 a.m. and 2:00 p.m.

online. volumes stayed above $120 million an hour at those times. the results wither right in line with estimates. so what's in store for today? $2.27 billion in sales is what adobe's estimating. big category winners are expected to be toys, gadgets and sporting goods followed by clothes. >> why does apple have so many more of the sales? i've heard similar statistics in the past that when people are engaged with things, when they're buying things, they're much more likely to do it with an apple product than an android. >> if you're getting an apple device, you probably have a little bit more money, disposable income to spend. and then the big outperformer here was the ipad versus android devices. and there are more retailers who are creating tailored app experiences on the ipad specifically. android tablets, so many different sizes, it's hard to create an app. you're more likely to be engaged, more likely to complete a purchase.

>> that makes sense. >> interesting, thanks, john. >> yeah. we'll talk more about shopping trends in a few minutes with the ceo of stella service, a company that tracks online customer service. joe? >> yeah. so you talked about this china story where they were delivering cakes. >> cakes, birthday cakes and other stuff. >> they got grounded, though, because people were not ready for the service. they only bought three of them. in china, the pies and cakes were being delivered physically by drones for a while. >> it's the jetson aspect of this story that gets you. >> well, you do think of the downside. but think of the upside of it. it is -- that's what i didn't think about immediately. it's the last trading month of the year. december, historically the best month on average for the dow. richard bernstein, ceo of

richard bernstein -- can i do it every time, rich? >> i'm happy to sacrifice for the ratings. go ahead. >> no. just thank god your parents did not give you a middle name. >> they did. >> i gave him a middle name "effing." that is an "e," and people are starting to use that for a middle name, effin. did you think -- this could be 30% this year for the s&p. >> right. >> i was under the impression that because earnings were only going to grow 6% from now on forever that we had to accept 6%, 7%, stock market advance. haven't you heard that as what people have been saying for the last five, ten years to explain the underperformance for the past 15. they said don't look for big gains, look at 7% for the year. where did this come from? >> a number of things. you did have earnings, you know, up 6%, 7%. people didn't expect it to be up

6%, 7%. you had a little bit of multiple expansion because people had more confidence again. that's part of what's happening is that the hangover from 2008 is finally starting to go away. >> that's manifested in expanding multiples. >> and then we have the fed. and the fed is contributing obviously very similar to monetary policy. and that doesn't hurt either. so you put it all together. it's really, you know, not from our perspective, not that surprising that we had a big up year. >> what about next year? we have had three 30-plus years back in the mid-90s. that's my dream. i wanted it to happen again some time. what are the chances another 30 next year? we could do 30 again. >> i don't know if you could do 30. but look, we're expecting above average returns. >> next year. >> next year. >> double digit. >> double digits. we think more confidence is coming back into the market. we do think earnings will turn up. we think earnings will accelerate next year.

and you still have an immense amount of -- immense audience that doesn't believe this is really happening. think about every hedge fund guy you have on this show. >> right. >> who talks about how it has to fall apart. it's going to be horrible things going on. yeah, because they're paid to hedge. and, of course, at the last peak, hedge funds were not hedging. we will see that go away. we'll see them join the fund. >> you don't think this is that likely, do you? and we've got to navigate taper. and a fed exit too, don't we? that's going to make next year tough. >> i was one of those suckers that thought mid single digits was going to -- >> forever. right. >> i didn't think investors would want to pay a higher multiple for. we discussed it, record profit margins on the belief that the fed is printing all this money. but, of course, you print enough money and you can take stock prices anywhere on the upside. so, yeah, you can see 30% gain in 2014. but only if the fed adds a few more trillion dollars to the

balance sheet. to me, again, this is a fed-driven market. i think what we've seen in the last six months is a change in the bond market in terms of rising interest rates in a way tapering for the fed and i think that's the story in 2014. because if the ten-year yield continues to move higher, i think that in and of itself can stop this rise in stock prices. >> this is margin driven, essentially, people are borrowing money to buy stocks and it's the cheap interest rates that are out there that are fueling the stock market? >> well, that, but also corporate profit margins. >> yeah, but that's -- is that for the fed-induced? >> well, a third of the increase in corporate profits off the trough of 2008 is related to lower interest rates -- >> how much is that going to change given that companies have termed out their debt substantially? >> well, it's a rolling thing. interest rates are moving higher so that incremental marginal gain is not going to be there. >> i think what people are

forgetting, interest rates are likely to go higher. bond portfolio managers are the most concerned they've ever been. everybody thinks rates are going higher for some nefarious reason. nobody can believe they're going higher for the reason they always go higher. the economy's getting stronger. and that's the point. so if the economy gets stronger, earnings should pick up. margins are record highs. >> you guys are on different sides. the most important question is this thing, this market floating on the ether of fed -- >> i wanted to ask -- the reserves haven't gone out into the economy. they've created it, but they haven't been -- >> you don't see the velocity and you don't see -- you see some lending pick up. that's why i was asking. >> you can't really say the 85 billion goes out into the economy and goes -- >> through margin. >> you're saying through margin. you could have done that by staying at zero. you could have done that by staying at zero. >> it wouldn't be excess reserves, except for the extent that the excess reserves or the qe keeps a lid on rates in the

real economy. >> in the real economy instead of just the fed funds rate. >> okay. >> the fed's increase their balance sheet this year. there's been a huge multiplier in the size of increase of market cap. so the fed's balance sheet about $1 trillion this year. but the u.s. market cap could be up $4.5 trillion. that's confidence that the fed has everyone's back. we hit a bubble in fear. i think we now have somewhat of the reverse as measured last week to have the lowest number since 1987. >> so even sentiment figures you're saying. but it wouldn't take long to shake that back to negative. >> yeah, you have a few bad weeks, few bad months, you can change that, but right now, i think, we have the opposite of a bubble and fear we had over the last couple of years. >> right. >> i think the longer term sentiment measures show people are pretty concerned. i mean, credit suisse put out, that it was the lowest in 50

years. my group at merrill shows wall street strategists are recommending the lowest allocations in 30 years. it's hard to say there's euphoria. >> i agree with you. people are still lending the government money, it's hardly, you know, all that. >> there are a lot of richard bernsteins too. >> there's tons of them. >> you don't have the middle initial to set you back. >> what's your middle initial? >> d. >> don't tell him. >> david. >> but richard e. bernstein is better than not having a middle name. >> i'm not convinced of that, joe. >> all right. mixed reports of the first weekend of holiday shopping. now ecommerce comes into focus. we'll talk to a company that tracks online customer service. that's next, but first, florida state and ohio state now find themselves as the top teams in the latest bcs standing following alabama's shocking loss to auburn on saturday. auburn stunned alabama with a

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welcome back to "squawk

box," everyone. we've been watching the welcome back to "squawk box," everyone. we've been watching the futures this morning. at this point, there are some very, very modest green arrows. dow futures up by about 4 1/2 points, s&p up by less than a point. nasdaq just under six points. of course, remember, we are in the first trading day of december. and it has been an incredibly strong year for all the markets. you're talking about stocks up by about 20% across the board. bank of america's going to be paying $404 million to freddie mac to settle all claims related to the mortgage securities. the bank says the payment is fully covered by the companies reserves. cyber monday is upon us. and those whop didn't find what they wanted at the malls are making their way to computer screens across the country right now. the co-founder and ceo of online performance monitoring company stella service. let's talk about what you do. what kind of online monitoring do you do? >> sure, so we actually go out and purchase real items from all these companies every day.

we call them, we e-mail them, find out what it's like to be a customer of all of these businesses and match apples to apples. >> you see how the computer systems are working? >> yeah, we track the ordering experience, we track the things off the website itself. >> where were you when the government was putting healthcare.gov together? >> yeah, we're focused on retail right now. >> what's happening with the online shopping experience? >> so everybody's chasing amazon at the end of the day. amazon as we saw last night on "60 minutes," pushing the envelope on convenience. and everybody's trying to deliver a more seamless shopping experience. >> when you say chasing amazon. because amazon has the best online experience that -- of -- that your measurements show? >> yeah, in terms of fulfillm t fulfillment, especially. they're as fast as anybody, distribution centers are all over the place. so shipping and returns and refunds are just so efficient that everybody's trying to keep pace with that experience. >> who's the worst? >> well, we take the warren buffett approach. we praise by name and criticize by category. but i think a lot of the big-box

guys are having difficulty trying to keep up in terms of all the fulfillment stuff that amazon does. but that's why you're seeing price matching with all these guys because they're trying to figure out some other way to keep the playing field level. >> and what about the human experience? have they gotten better online and worse in terms of the human contact? >> some companies, yes. if you look at the traditional players. some of these companies are terrific, if you call them, they're going to pick up the phone right away. you're not going to be in a line or queue forever. but some companies lean a little bit too much on technology and people don't like losing that touch that human touch. >> how do you get paid? the companies hire you to monitor them and you give them a report? >> we track everybody no matter if they pay us or not. just like nielsen or any other company. we're tracking these companies and, yes, we make money in our business model focused on their

paying for access to our data. >> and it's mystery shoppers. give me some anecdotes and what you found. >> over the weekend, it was interesting, placing a lot of calls and e-mails to these different companies. we found that the traditional guys, again, nordstrom and l.l. bean, really quick to answer the phone and address customers. again, some of the big box guys, walmart, best buy, lowe's. >> if you're not naming names, what's the biggest problem you find online for the -- when you go and try to buy a product online? what's the biggest mistake that retailers are making? >> it's a good question. a lot of times people don't realize that the customer is looking for something. and they try to upsell them or try to put other things or ideas in their mind instead of just making it easy for the customer to do what they want to do. >> do you return the stuff? >> yeah. we buy all this stuff and return it. we actually produce ratings for consumers. >> so you don't have a bunch of stuff you need to get rid of.

>> i can put you in touch with our mystery shopping team. >> does anybody call and go, "stella!" . >> we get that a lot. from u.p.s. >> they yell stella? >> well, we're ordering millions of things and then returning it all. coming up, we'll have the latest on that deadly commuter train derailment in the bronx section of new york. investigators have recovered the black box recorder and mary thompson will join us from right near the scene when "squawk box" returns. all this week, "squawk's" higher learning project. innovating education by disrupting the classroom. putting the university system to the test. how the public and private sectors can reshape the nation's workforce. the brightest minds on the front lines of learning. twins. i didn't see them coming.

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welcome back. four people were killed and more than 60 injured after a commuter train derailed in the bronx section of new york city yesterday. mary thompson is live on the scene. she joins us now with the latest. mary? >> good morning, steve. you know the mta have been saying, while there are worker related fatalities and track related fatalities, this is the first time in 31 years there have been passenger fatalities on metro north, the nation's

busiest commuter railroad. cranes have been standing up some of the cars overturned yesterday as the national transportation safety board begins its on-site investigation which is expected to last seven to ten days. the train's black box will be analyzed, passengers will be questioned, and the tracks will be inspected. here's the ntsb. >> well, we look at track conditions, try to identify exactly where the train came off the rails, how it came off the rails, did it come off both rails and with the same amount of force, or was the force concentrated on one rail? >> the train was headed south to new york city early yesterday morning when it came off the tracks about 11 miles north of grand central station stopping right at the edge of the hudson and harlem rivers. reports say the engineer tried to apply the brakes before a major bend in the tracks here in the bronx but said the brakes didn't work. along with the four fatalities,

63 of the train's roughly 100 passengers were injured. of course, this will also affect the commute of about 26,000 riders who take metro north's hudson line on average each workday. it'll continue on beyond the investigation. you need to get the mta to repair the tracks. >> thanks very much, mary. mary, do they have anything specifically about the speed of the train? do they have a miles per hour number yet? >> no, not yet. we, again, spoke to the ntsb early this morning and they don't want to say anything about that until they have a chance to examine the black box, speak to the engineer and also examine the tracks and eyewitness accounts, as well. >> mary, thanks very much for joining us this morning. becky? when we come back, bob kerrey on the state of washington, d.c. we're going to talk about everything from obama care to the debt ceiling and whether or not the art of compromise is dead in washington.

we have the unique perspective of a former beltway insider right after this. first, though, as we head to the break, let's take a look at the biggest winners and losers on the s&p year-to-date.

welcome back, everybody. our guest host this morning, former senator bob kerrey who was the executive chairman for research and scholarship. and bob, we've had you on most of the morning and haven't touched on what's been happening in washington. big headlines this morning from all of the major newspapers focus on what's happening with obama care right now. the "new york times" is claiming that insurers say the health care website is still flawed. the "wall street journal" says that connecticut is considering bypassing some of the back ends just to check to make sure that people are actually residents and whether or not they would qualify for a lot of the aid. and with the deadline approaching january 1st for when a lot of the health insurance plans were supposed to kick in for consumers, it leaves a lot of questions. how would you say things have gone so far? and how confident are you of things up and running by january 1st? >> well, i'm not going to get a

nobel prize for observing, it hasn't gone well. to establish an insurance exchange at the federal level is an exceptionally difficult job and to forecast it's going to be as good as amazon. you just had a conversation about people trying to catch up with amazon, the government's not likely to be able to do that ever. >> pretty low bar. >> no -- >> for the peace prize. doesn't take much. >> for the peace prize, right. >> yasser arafat? >> no, i think it's going to be exceptionally difficult to establish that exchange. and my general rule is i think you should have a prohibition against putting anything in a law that produces a round of applause. and that's the problem with health care. both sides are trying to produce a round of applause. but at the center of this law is an attempt to establish individual marketplace. that's what it's trying to do. and when you establish an individual marketplace, there's going to be substantial change for all of us. but when the president gets up and says, don't worry if you got

the insurance policy, you're not going to have to change it, that wasn't true. >> so it was sold -- the marketing was flawed. >> but when the republicans say all we've got to do is tort reform and let people sell across state lines, that also isn't true. we need to have substantial -- if you want to get costs under control, we have to have a substantial amount of change. >> but the -- the change that was put in place wasn't necessarily put in place to change the cost curve. i mean, that's part of the problem, you had two problems. one was uninsured people, one was the cost curve, and a lot of obama care deals with making sure millions of people are going to have insurance now. it doesn't necessarily bend the cost curve and make sure healthcare costs don't continue to climb. >> it would be unquestionably be the cost curve if you allow the insurance companies have copayments and deductible so i can carry more of the costs. at the same time, what congress is doing has been reluctant to do anything with medicare that would assume more of the costs or for that matter military

retirees. you've got plenty of evidence where on the right and on the left when it comes to health care, people are saying things that produce round of applause. not telling people the truth of what's going to have to occur if we actually want the cost of health care -- >> the times has a good piece here. i thought the headline was misleading where -- >> the back end. >> but the back end does not work. >> the front end -- >> it's insurers claim that the health website is still flawed. it is still flawed because the back end does not fit. >> they can't get the information. >> from what i can tell, everybody knows that the back end has not been addressed yet. >> but that'd be like me saying the whole thing works, the only problem is you can't buy anything. >> right. >> i can get 50,000 people on at a single moment. but none of them can actually make a purchase. none of them can get anything that you can get when you go on the site. >> you weren't here on friday when we reported that walmart had like 400 million people

online between 6:00 and 10:00 p.m. >> on thursday. >> on thanksgiving itself. >> if you don't have this how incredibly complicated it is, for the people writing the insurance, they don't know the subsidy each person gets and they don't know what the people are and they can't do the actuarial stuff for the plan. >> the problem is, the phrase back end is an insurance presentation. what the back end means is those are selling you what you're trying to buy. you can't get a price, don't know what the subsidies are. and as a consequence, you're not going to be able to purchase the thing -- >> that's a major problem. i don't know how you give yourself a passing grade. >> well, you're creating the appearance that 50,000 people can go on and process all the way through -- >> you're saying negative things right now about obama care, bob. you know that. >> am i really? well, i think there's plenty of things -- >> i want to give you a nobel prize. coming up, the obama

administration says it's met its deadline, 50,000, as you just heard, people can use healthcare.gov at the same time. but the jury's still out and experts say major challenges remain. we're going to talk to former hhs secretary michael leavitt. but first, before we head to break, here's a sample of sunday talk show commentary on the obama care rollout. >> this one has a ways to go. but it is certainly working reasonably well. >> the information coming out the back end to the insurance companies is still garbage. >> they're working around the whole problem. >> i don't care if you're for it or against it, republican or democrat, we should not tolerate the level of inkcompetence securing this site. >> there are better plans for many of these people. and i think that's what's gotten really lost. every day we're working to be an even better company -

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welcome back welcome back to "squawk box." making headlines, a former bp drilling engineer charged with deleting text messages and voice mails about the company's response to the massive 2010 oil spill in the gulf of mexico heads to trial. jury selection scheduled to begin today in new orleans. one of four former employees charged with crimes related to the deadly disaster or the aftermath. his case is the first to be tried, joe. the obama administration as you know said it met its december 1st deadline to fix the glitches in the plagued aca

website. not everyone is convinced. and we've been just looking at the daily newspapers, "the times," "wall street journal," let's talk to someone who knew a lot about this, still does. michael leavitt, he's currently the chairman and founder of leavitt partners. and we're all trying to -- secretary leavitt, we're all trying to figure out to sift through sort of the administratio administrations what kind of progress was made. >> well, there are two different funds in this battle. first is the political spend battle and the second is the logistical challenge of making a system work. and i suspect right now the administration is losing both because they're dealing with a reality and not spin. people are -- the dilemma for anyone like you and like me trying to figure out exactly what is happening is we don't

have perfect transparency. but, i think it's very clear that people are not able to complete their transaction. and in many ways, i suspect the spend battle is about buying time. at the end of the day, people are either going to have purchased insurance or they're not. none of the spin or rhetoric will have any -- will have any impact. however, the -- right now the administration in my view has to begin to change tactics. they've got to begin to look for what i would call the 60% solution. they've got to find work arounds that will allow insurers the confidence that, in fact, they'll get paid. and then they've got to allow simplified ways of enrolling people or they're going to have to start pushing -- pushing deadlines out. >> yeah. >> pushing deadlines out, though, there are a lot of people who have lost their insurance coverage and come january 1st, they need a new coverage plan. do you think there'll be a lot

of people who get left out in the cold? >> well, i think that's where the 60% solution comes about. i think, for example, they could come up with a one-page sheet of paper that would say if this is the person's situation, we're going to estimate that their subsidy is x and the federal government will behind this and work this out as time goes on. but they could instruct the insurance company to say just give them insurance and we'll work it out with you and we'll guarantee it. >> although, here's a quote from an insurance executive who spoke to the "new york times" on the condition of anonymity. we want to be paid. we want to pay claims. we want to pay claims, we need to get paid. you're suggesting that the government would promise to pay all of that even if it didn't work and didn't go through? because this says that the chief digital architect says they still have 30% to 40% of the insurance marketplace is still being built. he told congress on november 19th that the back office systems were still being developed. >> i want to be clear, i'm not making that proposal.

but i think the administration is facing a situation where if they want to get through this, they're going to have to do something like that or they're going to end up with the problem that you clearly articulated. people without insurance who were canceled as a result of this law. they're in a very difficult position. but they've put other people in a bad position because they have not prepared and they've not acted in a way that would avoid this situation. >> i was thinking that the way the initial rollout went, i think they should have underpromised and then overdelivered this time around. but they are not in a position to do that because they've got nervous democrats up for re-election. they had to fix this. they had to come up with something they said was a fix. december 1st. but puts them in the unenviable position of, again, saying something that probably from what i read -- i mean, if you can go in and log in and maybe get on there. but if you -- the back end seems like it's more important than the front end. and if you don't have the back end done, how do any of these

companies write insurance? signing up for it is one thing, actually getting it is another, right? >> that point you're making is absolutely true. i'll reflect in history back to 2006 when i had the responsibility of implementing the medicare part d program. we reached -- we had some substantial technical problems in the first eight weeks of the system. there was a stretch of about 13 days where i was in 20 states and that 13-day period. and my message was basically breathe through your nose because we're trying to get this fixed and we're going to get this fixed. and i was buying time. i was doing what i thought was the most transparent information available. we were accepting the fact there were problems. we got the system fixed. but part of that was on a small cohort of people. we said to the pharmacy world, give them their drugs, give them a plan. we will guarantee that the payments are made.

>> yeah. >> however, it was on a very small subpart. it was not on the vast majority. and at some point, there's going to have to be some kind of work around to give insurance executives like the one who spoke -- that you quoted, the assurance they're going to get paid or not going to do it. and they shouldn't be expected. >> secretary leavitt, it was very impressive accomplishment to get part d up and running, but how much more difficult would it have been if in the run-up to your implementation you had congress threatening to shut the government down proposing to defund the program itself? i mean, you had bipartisan support for your program, did you not? >> oh, no. you're forgetting what happened in 2006. we had exactly the same situation. we had the same things being said. it was just being said by the opposite party. this is a political game that goes on. and i understand it and you understand it. >> but you didn't have -- you didn't have democrats threatening to shut the

government down to de-fund the program? >> no, they were asking simply to shut the program down. >> but it wasn't -- >> delay it a year. i'm not comparing it with exactness. i'm just reflecting a lesson of history. we were feeling that pressure. and we had to perform and we came up with up with solutions that at least met the core problem but over time the system was repaired and within -- within eight to ten weeks it was running smoothly. people were happy. at that point, every congressional office in the country wanted to do an enrollment event. obviously, the democrats are frantic about this. they ought to be. they have a lot on the line. i'm not suggesting it's exactly the same but if they get the system fixed their problems will resolve. their dilemma is they don't have a system that's working. >> secretary leavitt, thank you. we appreciate it this morning. >> good-bye. when we come back, investors favoring equities over bonds for six sfragt months. december is historically one of the best of the year.

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let's get let's get down to the new york stock exchange. jim cramer joins us now. the water cooler story, jimmy, is, obviously, these drones and now i look at bezos. he looks like mega mind to me. his brain seems to be growing and if he -- he's the closest thing we have to steve jobs. do we take him seriously on this or not? >> we have to take him seriously and u.p.s. fed-ex, every lobbyist against this seriously, too. this was a fantastic advertisement for going to amazon. the first thing i did as soon as i saw it, i said let's see the deals amazon has and there's fantastic ones with prime, be able to gift that. what a master he is. >> you're not buying it then. i wonder if you could buy a drone and have it delivered by a drone. i didn't think about that. >> if you look at the box delivered, what could be in that

box? do you deliver like a diamond ring? someone shoots down the drone? >> they said 80% of the stuff -- 86% is -- >> five pounds or less. >> 5.3 pounds or less. >> yeah. i don't know. you get that big screen tv by chopper, i'm there. i'm there. i'm there. that would be a dynamite thing. >> you don't think u.p.s. or fed-ex is thinking about the possibility of this? >> block it. go right and lobbying right now. >> joe wants to short u.p.s. this morning. >> no. >> they're not involved. >> it's a great company. you go to the faa saying this is the most dangerous thing since allowing people to talk on a plane. >> on a plane. all right, cramer. see you later. when we come back, the chief u.s. equity strategist at goldman sachs will share his idea. plus top executives.

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we're generally referring to technology and when's been happening out in silicone valley. you have a whole new type of disrupting with higher education. >> we are disrupting and not disrupting. we are buying into the value of liberal arts education and redefining what that education is supposed to accomplish. >> minerva is saying this can't be done from the inside of -- >> if you start from scratch and say we give the cost s embedded and take out those things that don't add value, it's shocking. put together a curriculum for the graduates that the world needs, it is quite exciting what you can do in that environment and if you begin by saying, we won't give you anything. you have to earn everything that you want, it is surprising how motivation these young people themselves have. >> i'm stunled there hasn't been more call for change. $50,000 a year for plenty of ivy league schools. $200,000 to $250,000.

>> we don't compete trying to produce high quality and low cost. quite the opposite. we add additional costs to keep alumni happy, create the marginal professor and opposed to trying to produce simply the highest possible quality at the lowest possible price. >> thank you for coming in. >> today. >> nice to be with you. >> that does it for us. right now it's time for "squawk on the street." ♪ good monday morning! hope you had a great thanksgiving. welcome to "squawk on the street." wall street gets back to work with a busy week. cyber monday today. a jobs number on friday. the kickoff of december. historically, the best month of the year for the dow. a lot of data to respond to and manufacturing ism in an hour. some losses in europe despite strong pmis over there. the uk